joins us to talk about his new book, "the age of austerity." and we will focus on u.s. manufacturing with crests savage. -- chris savage. host: thank you for being with us for today's." we will be talking about the economy. later on we will have the head of the mortgage bankers association. thomas edsall will be with us about his new book, dealing with politics and our final segment

will be on reviving american manufacturing. we will begin with income inequality. we will show you some moments from last night's candidate that a debate and the president talking about this issue in the state of the union and engage you in a conversation on income inequality in our society and what you perceived fairness to be. host: the whole topic of income inequality comes up in the papers this morning. the largest tree this is in "the new york times" op-ed page. the longtime head of the pew research center.

you can see the headline in the piece -- don't mind the gap. guizot, it is around this idea of you but -- host: it is around your idea of the views of income inequality. what does a fair shot look like and how does the government

support that? that is really what we want to engage you with this morning. there are a few other pieces. here is one from "the new york times" about the president's and house democrats, their meeting in cambridge, maryland, with the party caucus. so, there is another reference to it. let me show you how the topic was addressed by mitt romney in last night's cnn candidates' debate leading into the florida primary next tuesday. [video clip] >> i think it is important to insure we do not castigate people who are successful and tried by innuendo say there is something wrong been successful in having investments and having a return on them. mr. speaker, you indicate some how i did not earn the money.

i earned the money. i did not inherit it. i take risks. those investments create jobs in america. i am proud of being successful, in the free enterprise system that creates jobs for other people. i am not going to run from that. i am proud of my taxes i pay. my taxes plus charitable contributions this year, 2011, will be about 40%. host: on the phone is the political reporter for "the miami herald." florida the about its history has had cycles of boom and bust. people capitalizing on real- estate and other ventures in the boom years and then the cycle turns around. we are in the middle of one of those times and florida. how is the whole issue playing, income inequality, among florida voters this year? guest: more of a concern to democrats than republicans. i suspect -- i have not told -- but i suspect independents, probably the majority -- a

little more concerned. but that said, as you heard on the campaign trail, newt gingrich adopting populist message. strayed off the republican reservation a bit and mitt romney's sort of dressing down of him. there is a concern among people here. we have busted. our boom is gone and housing market is awful. the job picture is pretty awful. you look at the surveys and you talk to the average person on the street, politicians being honest in a moment of candor, these are tough times and floridians are rather displeased. host: the president has made a number of stops and the states. how is he planned issue of florida's economy when he talks to the citizens? guest: the way he played it nationwide. i think the president's biggest problem is that when he was leaving congress -- or, better said, when he did have the majority on both houses, the

democratically controlled senate, a wing to its rolls, did not accomplish a lot of the agenda. coupled with obamacare, as the call that in republican circles, could slow down his agenda. as a result of lot of people did not see the president has been very effective. the economy is showing some signs of unproven but people are not necessarily feeling it. host: as we go to election day tuesday, handicap what happened last night and how it might change the equation. guest: what you saw -- actually the debate on monday night you saw a change in the kind of the narrative and dynamics of the race. mitt romney really had a good performance on monday night. then after that newt gingrich, as he did in iowa, kind of floundered -- campaigns are stories, things of messages. newt gingrich's messages from one place or another, he has had big, enthusiastic crowd, but you look at television, the way

things are playing out -- msnbc, fox, cnn -- the coverage of gingrich has been largely negative, and that is in part because romney's campaign was driving the never to a wild brownie was taking on obama. last night, it really did not -- romney looked good, he had the crowd on his side for once. jacksonville, friendly, home territory. i think what you will see on the news clips, i think most of the people are going to see the clips seem on the news and hearing the talking heads, i think that coverage of the debate itself rather than the debate is going to lead people to think more and more that romney is far more than necessarily dead. that is me saying i think romney will probably win. that is the safe bet. host: what is your projection for turnout on tuesday? guest: the expectation games

between republicans and democrats. i would imagine probably around 2 million. host: what percentage of eligibles? guest: probably around 50%. closed primary means only republicans can vote. only 500,000 early absentee ballots have been requested. the number changes -- something like 260,000 ballots have already been cast. host: candidates are treating it like make or break, analysis and the paper. and our own schedule of camera shots of around the state, they are crisscrossing the stage trying to reach every voter. thanks so much for giving us your leg of the land as the floridians listen to these last- minute messages and make up their minds, the republicans, on tuesday. guest: thank you very much, and have a good day. host: from "the miami herald." we will get back to the topic,

part of the debate last night, income inequality. i want to get back to the piece about mind the gap" income inequality and fairness. there is that word again, fairness.

so, income inequality, what is fairness? are you concerned about the gap between rich and poor? that is the topic, echoed in the republican bake as it moves around florida and the last days of the primary. pennsylvania. republican. you are on the line. caller: good morning. host: you got the floor. caller: this income inequality is just an excuse to try to reduce to view -- reduced due -- redistribute the wealth of the nation, to take from somebody who is profitable, somebody who works hard, and takes the fruits of their labor and gives it to someone else. you should get what you warn. host: for example, when people say tax policies unfairly favor the wealthy, what is your reaction? caller: the wealthy pay the greatest percentage of the taxes.

almost half the people pay no income tax. host: jim from oil city. robert is from milwaukee. democrat. caller: good morning. the question, income equality, what is fair, is somewhat vague. host: i would agree. [laughter] caller: my opinion is that, it is all right for anyone to make as much money as they want to make. and if they happen to being fruitful in making all of that money, it is good for them. the problem is that a lot of the people have become very, very, very rich, send their money out to swiss bank accounts and also to the cayman islands and they are not paying taxes on all of that money. which is the biggest problem. it is not a matter of how much money you have, it is a matter of where you are going with your money and what you are investing in. you are not investing in the

united states of america because all you are concerned if is making sure that all of your money is somewhere else. so, i think that is where the problem lies -- is not necessary just democrat saying this about the rich, it is also some republicans and also independents. host: thanks. from milwaukee. a viewer from twitter -- we are talking about what is fair in american society. new hampshire. hello, to patricia. caller: i do not know where this myth came from -- and the, jealousy, has nothing to do with redistribution of wealth. it is about paying the countries bills. and there is a bible scripture i

would like to quote for you, second corinthians, it is written those who gather much should not have too much, those who gather little kids should not have too little, and that is from second corinthians. host: the president spoke about income inequality and fairness in the state of the union address on tuesday. let's listen to some of the themes. [video clip] >> you can call this class warfare all you want. but asking a billionaire to pay as -- at least as much as a secretary in taxes, most americans would call that common sense. we don't begrudge a financial success in this country. we admire it. when americans talk about folks like me paying my fair share of taxes, it is not because they envied the rich. it is because they understand that when i get a tax break i

don't need and the country can't afford, and either adds to the deficit or somebody else has to make up the difference, like a senior on a fixed income or a student trying to get through school or a family trying to make ends meet. that is not right. host: back to to the "the new york times" piece -- next is a phone call from arizona. susan, republican. caller: i have a comment to make but when you just show the secretary, think it is balloon bursting she is not a secretary

that most people and makes 40,000 to 50,000, she probably makes between $200,000 to $500,000, so they better get their facts straight on the poster child. but i am so tired of mitt romney being hit on monday. nobody says anything that president clinton is making $750 million from speeches, or let's take movie stars or singers, jay-z, $300 million, beyonce, $200 million -- good for them, those young kids. i am tired of them hitting mitt romney. he made $250 million in 25 years of business and he has given a lot of money to charities, and to helping people who are not working -- they are paying no income tax. i am really tired of this and i am really tired of mitt romney being -- they cannot find anything dirty on him so they are going to go after his finances. let's have somebody squeaky clean and the white house. i am tired -- everybody needs to look up that bloomberg article

because of the secretary is not making $50,000 a year. warren buffett, 80 years old, has all of this money and all of a sudden now it is bad to have it. give me a break. america, wake up. good for mitt romney. host: susan from arizona. speaking of governor romney's taxes, any tax economics columnist in "the new york times" and here is the headline. "mitt romney paid more than he owed in taxes." . about a mistake in the filing of the tax forms -- he writes about a mistake.

next up is baltimore, a democrat. caller: good morning. my response to what the income disparity -- all you have to do is observe the debate last night. i searched all pundits, i searched wolf blitzer, cnn, msnbc, and i was looking for that answer to the republican woman who got up -- i am unemployment the -- i am unemployed and have no insurance. i do not know if i missed it. they did not answer her question. they let that woman who -- they

went into 12 different directions, iran, china, president obama. not one single candidate leaned over the podium and says, ma'am, i am a rich, powerful man and if you would meet me after this debate, i will put you in touch with either training or a job so you can go home and feed your family. not one single republican candidate addressed that woman's personal problem and that is an example of the income disparity. host: the question -- if a democratic candidate were in the same situation you think they would have taken that step? caller: absolutely. president obama did it during the address. he addressed the students who need these outrages college loans paid off. he discussed this ridiculous food stamp president stuff.

come on. it is not just people in the ghetto hurting. they are always hurting. we are always hurting. you have college educated children, master's degrees, an employee. what are they going to do about them? tell them to pull themselves up by their own bootstraps? not to hold your time but that was a perfect example of the republican candidates not addressing that poor woman's question. and i challenge in the media to investigate and to investigate that one question. it was never answered. host: thank you, erica, from baltimore. laura tweets it -- the front page of "the wall street journal" has the ceo bankruptcy bonus story.

next is a call from silver spring, maryland. jake, independent. caller: if i understand your question correctly, you are asking about a fair shake and what is a fair shake. i would posit that we do not get a fair shake and we can't get a fair shake because a lot of people on the upper end don't have to play by those rules. if you fail, you should fail. if i fail, i am going to fail. that reporter from miami, he was talking about the boom-bust cycle and that is what is going on. i would like you to play ron paul's response because i think he is the only one who actually addressed income disparity in a way that makes sense, that you would understand.

for example, who got the bailout and who got their house foreclosed on? those are questions you got to ask. is it a fair system? it is not a fair system. and as long as we are able to manipulate our currency the way we are doing, our paycheck is going to be worth less and less. the value of the paycheck i take home every week is less because we are able to do that and bail people out. and yet we lose our homes? it is not fair, but the system is flawed and you should play ron paul's response because he understands that and more people and american need to understand and you cannot understand this topic if you do not understand what he is saying. i would appreciate if you take the time to chew it up. host: republican. don is a republican. caller: good morning, susan. and honored to speak to you. to rebut the lady from arizona -- if you think romney's kids

get $10 million each from the money he made at bain and you think the democrats are going to run an ad that shows people in south carolina lost their jobs, and how many times it will be played over, you have to be nuts to be voting for romney. and to have mccain and dole stand up and say we can't vote for newt gingrich. those people are not. these are the same people who have been signing off for that money that has increase the debt from $1 trillion when reagan was there to $16 trillion now. we are in desperate straits and this impotence president does not do anything to mention 1 cent he will cut. he keeps spending money. and it is ridiculous. we need to address the fact that newt gingrich is going to take it to obama at the debates, to ask him to define what he is going to cut and be specific.

romney can't do it. i hope to god we can wise up, so when the republicans are lining up to kill newt gingrich, that tells me something, they are terrified of him, and again, i think it is an honor speaking to you and have a great day, god bless eastin. host: thank you so much for watching. david mason goes by socialjustice on twitter -- charles crowd hammer -- charles krauthammer has another view on income equality and the state of the union. he writes --

again, that word fairness popping up as we are engaging you in a conversation about what is a fair shake in american society. that is the way one of our viewers put it and does the job force. iowa. tim is a democrat. caller: thank you for taking my call. first of all, i would like to discuss the topic of people buying into the proposal -- the people arguing against the rich paying little or no taxes. but if you look at the pace gales of the working class and the executive levels and see how the executive levels pay has grown with excessive bonuses, you would understand why there

are people paying little to no taxes. so you should really be addressing the pay scale in america. the second thing is, of these people who are today traders, sitting there doing nothing but sitting at home all day doing trades and paying little to no taxes, or a lot less taxes than the people out busting their butts all day. this is wrong and it needs to be addressed. host: sondra is from michigan. ibp. good morning. you are on. caller: thank you, susan. i was calling because of the president's speech. i was watching it and i was watching when he mentioned the fact that these people, like the representatives, should also pay taxes like the rest of the americans. i noticed that not even 20% of

those people stood up and clapped for that. and this scares me that our government, the people that we put in there, that is also a union, didn't bother to event clap for that. that tells me they did not have many -- they did not have any interest of getting any money of theirs for the cause of the american government and we put them in office. and they are a union. and mitch daniels gets on there afterwards and he wants to get rid of the unions. so, he is doing this right for working but there are no jobs for anyone to work on. and then you have been bridge winning to get rid of custodians -- gingrich wanting to get rid of custodians. the people in office, they look kinda silly when they talk to the american people. they really look silly.

i don't even have a clue as to who to vote for because they don't want to give up their money. host: ok. thanks very much for your comment. this viewer send an e-mail. we don't have a name. back to newspapers. this is from abc news. tax payers still owed $133 billion from the bailout.

also from the papers this morning, stimulus recipient files for chapter 11. third clean energy firm backed by doe seek bankruptcy protection. -- seeks bankruptcy protection.

interestingly, the front page of politico has a solyndra story. obama not afraid of solyndra. obama tout its achievements on the campaign trail. next, california. good morning to kevin, a republican. caller: good morning. i believe the american people should pay 10% flat tax. there is no excuse for our to not be able to live on 10% of everybody's wages. host: to you, fairness is the basic tax code that is flat. caller: yes, absolutely. also, i would like to hear your opinion, if you could give your opinion. thank you. host: appreciate you asking but for our regular viewers, our job is to moderate the discussion and not offer our own opinions

on the conversation. "the new york times" talk about the senate vote yesterday on the debt limit. here is the story. next up as a call from cincinnati. debra, democrat. caller: good morning. i think this whole debate is being framed in the poll but wrong. it seems that people who are poor or people who are middle-

class are being framed as being jealous of the rich, or we want what they have or we want their money. that is not necessarily true. i don't want anything that i don't turn -- earn. i work hard for a living. i went back to school after my daughter graduated from high school, and now she is in college and i am in school trying to retrain myself because my first career just seemed to outsource itself in customer service. i feel the little bit of help i do need in the way of student loans or how she needs, i don't think anybody should -- i don't know, i did not think anybody should discourage us from try to better ourselves. that is the debate, we don't deserve help. if i walk up to my job one day and the doors were locked, and i never saw my people again on my bosses again, there is nothing i

did to deserve that. it was a hard time trying to find another job after this. host: absolutely no warning. the firm just closed? caller: right, the doors closed. host: never got a final paycheck? caller: no. host: did you have any inkling it was on hard times? caller: no. as a matter of fact, i had just gotten hired because i went out, submit my resume, went through two rounds of interviews, started that job in light december and a closed three months later. i had no inkling. i was very new. host: let's get back to your first point -- to you, fairness means a lot of help in dan's like student loans and one else? caller: if somebody does need food stamps. i heard barack obama being called the food stamp president as it is a bad thing, as if it is wrong to want to feed people who are hungry.

as if it is wrong. all these people who are supposedly religious and conservative, i mean, we are our brother's keeper, we do need to help people. i don't know. it is just so frustrating to hear people talking -- it is not about how much money mitt romney makes. i saw an article yesterday criticizing how much jon stewart makes. it is not about how much money they make but it is about how much we need help, the people down at the bottom just need a little bit of help. i don't know -- it does not take anything away from you really if we are all paying our taxes and putting our money in, then we all deserve a little bit of the investment back. host: thank you for for dissipating. in addition to fairness and income inequality, another team is the debate over immigration. here is the front-page of "the washington times."

from "the washington post" this morning -- "usa today" -- also, "the washington times" -- in this story it also talks about the administration's deportation policy.

and one more story -- "newt gingrich and romney play to the audience." talking with you about fairness and income inequality in society, a thing that has been struck by the candidates on the campaign trail. next is georgia. good morning to james. independent. caller: good morning. i am calling to comment about this fairness issue. i see government as one of the causes of income inequality. government regulations, with the complexity of the tax code, the need for political connections among ceo's has really restricted the number of potential cto's for a business. when you add all of these

requirements, your pool of candidates is much, much smaller. 75 years ago, some ceo may have been able to know how to run their business, but now you have taxes, regulation, and politics on mixed in, and it is just a law of supply and demand. when you restrict supply, the price goes up. that is it. host: mary on twitter -- next up is wellington, ohio. jay, republican. caller: good morning. how are you? i would like to make two quick comments. the first thing i would like to say about income inequality is the fact that why is earned income tax at a higher rate than investment income, people

sitting home investing? that is ridiculous. somebody sitting home is getting a better tax rate than somebody actually working. the second point i would like to make is, no one ever mentions the fact that mitt romney was one of the biggest anti-gun governors in ohio. not only oppose the assault weapons ban but he wanted gun registration. you never hear it mentioned. for that reason alone i would not vote for him. thank you for letting me speak. host: thank you so much. here is an e-mail from ken in atlantic city --

texas, this is patricia, democrat. caller: one of the previous callers kind of stole my thunder. i wanted to talk about the capital gains tax. the reason people pay 15% -- the reason that a 15% is because they say it is a double tax and i often wonder about that, kind of weird. if it is a double tax, then why would it be a double tax when we tax social security, unemployment, the military people, why isn't that a double tax? the other thing i noticed is i work for big corporations, how much of the income increase for the higher, the top, less than 1%, went from 200% to 200,000% -- to thousand%. there is a difference of what we are making, too. that tells me, who decides who makes what? that is not the market.

it is the people at the top deciding i am going to make this and they are going to make that. that is my comment. host: thank you so much. jim is deet i'm sure he does not mean some of the typos. next is a call from annapolis, dan, republican. let us. let us go to this e-mail from minnesota --

next up is ohio. patty, democrat. i don't think democrats, republicans, independents who are middle- class, the working poor. i do not think the issue is getting rich, the issue is fair wages for fair work. take walmart and you take this six family members who make in a year what 130 million american workers make. again, pay higher wages. taking the profits off the back of the workers. something i noticed, like during

the debate last night, i can't believe that the republican candidates are not bringing up the fact that obama -- we have the foreclosure fraud, we had the wall street fraud, not one individual has been prosecuted. there has been no real accountability. and none of them -- santorum, newt gingrich, obama, romney, have a plan for changing this or holding any of the individuals accountable, obama included. i can't believe that issue did not come up last night. where is the accountability? the working class, middle class, deal with accountability everyday. most of us are looking for some, if not all of those who intentionally took advantage of the system of the working-class

and middle-class. where is the accountability, obama? host: patti from ohio. donna, age 16 cents this -- some interesting people stories in the papers. wesley brown, 104 years old, the oldest active federal judge died this week. his work ethic capt. climbing the stairs to his fourth floor, making him the oldest active federal judge in the nation's history. he died monday in wichita, kansas. he was 104 years old and still working. north carolina's governor beverly per do -- beverly perdue will not be running again. she said on tuesday she would not run for reelection this fall. "the new york times" says political analyst, obama and

distance itself from an unpopular governor. one other people store -- americans being detained in egypt and one is the son of transportation secretary ray lahood. here is coverage of it in "the washington post." spartanburg, south carolina. good morning, on our debate on income inequality. caller: thank you for taking my call. my name is scott. yes, i think -- well, the citizens have been watching our

government for so long. i think we just got so much of a stalemate, the citizens will have to rise up and have a referendum against our government. because we do not have a right to challenge federal legislation. the only way we are able to do it is to have some form of that adds to the government and lets the people vote on these issues because it has been unfair ever since i can remember as far as the tax inequalities. it would be so simple to solve it. just put a flat progressive tax, the more you make, the more you pay, and then a flat commodity tax for people who are here illegally -- they pay part of federal tax. if you put a rise on the gasoline tax -- one was the last time we updated our gasoline tax, 1991? paying 9 cents to federal and the gasoline is going up and down, and if you put a flat percentage on the gasoline -- i think the people would vote to raise our taxes and get us out of debt, get our country back on

track, but we'll let those people to go to washington that is what we do, just let them go to washington and nothing happens. with the top communication we have today, due to our system was set up in the horse and buggy days. we have all this communication now. it would be so easy just to, i don't know, vote -- all the citizens vote on a certain issue, or and issue up to a floor. host: direct referendum. that we bought ourselves instead of having representatives. spot from spartanburg, south carolina. paul writes by email -- one of our viewer asks if we would pull ron paul from last night's debate -- last night's

debate. [video clip] >> we have to address the bailout in the system that favors a certain group over another. if you don't have sound money, if you have a welfare state, no matter whether it is designed to help the poor -- the welfare system helps the wealthy. if there has been this transfer of wealth. so, if we can stop all of these transfers to the wealthy class -- but the solution is not to tax the wealthy. if you give an honest product and the customers buy that product, you deserve to keep that money and earned the money, but there is a big difference between those who earned money and those who report off through the government and the monetary system. host: on this friday morning we told you we would do lots of discussion about the economy in different sectors. 45 minutes from now we will have thomas edsall, longtime political reporter who has a new book about politics in "the age of austerity." >> , with the president and ceo

of the mortgage bankers association -- next, we have the president and ceo of the mortgage bankers association. we will be right back. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> i do believe that the west, for all of its historical shortcomings, and i and scathing in my book in discussing these shortcomings, because they have to be admitted, for all of these shortcomings the west still today represents the most acceptable and universally

workable political culture. >> in 1991, the united states was the only global superpower. today, how to restore its status and the world, from former national security advisor brzezinski on his strategic vision on after words. also, did fdr you swat ii as a cover to create a more powerful executive branch -- did fdr used world war ii as a cover to create a more powerful executive branch? and lori andrews, how your rights are being eroded on social met works. "book tv" on c-span2. >> our "road to the white house" coverage takes you live to events in florida, leading up to the primary. >> by the end of my second term -- [applause]

we will have of the first moon andt base on the mon it will be american, and by the end of 2020 we will have the first continues propulsion system in space capable of getting to march in a remarkable short time because i am sick of being told us we have been timid and i am sick of being told we have been limited to technologies that are 50 years old. >> when the founders said that the creator endowed us with certain unalienable like -- rights, among them life and liberty and pursuit of happiness, they laid out a path for america that was not temporary, but enduring, a path that says in america, we can pursue happiness as we choose. we do not need a government to tell us what kind of card to get. we do not need a government to tell us what kind of light bulb to have. we do not need a government to tell us what kind of health care we will have. >> see what the candidates are posted on social media, along with political reporters and

viewers like you at c-span.org /campaign2012. >> "washington journal" continues. host: meet david stevens, president and ceo of the mortgage bankers association. we will be talking about how things fair in the real-estate industry in this country after the problems of 2008 and what the state of foreclosures is and specifically looking at the president's two proposals and the state of the union address. thank you for being here. why don't we start with the big picture? where are foreclosures moving along and what states are still far behind unsettling some of these foreclosures? guest: many of your viewers are still feeling a lot of pain as a result of what happens in this recessionary he, me, brought on in a significant way by this housing crisis. we are a lot better off than we were three or four years ago.

30-day delinquencies are down now over where they were a year ago but we still have this backlog of 90 day-plus delinquencies which is not recovering. a lot of it is due to several things. there are several states -- five states in particular hold about half of the loans in foreclosure in this country. we have significant concentrations in certain states. also a difference between judicial and nonjudicial states, more of a process standpoint, producing what is called the shadow inventory of overhang, homes passed the 90 day period still working the way through the system here that is what we need to focus on to get the housing market back on track. host: secondary issue, not homes gone to foreclosure but the number of homes under water, a distinction between what they mortgaged and how much they equity value is. give us a sense of where that is right now? guest: there are a lot of

proposals dealing with the negative equity problems. the president's announced a program called harp, and extended it to harp 2.0. it allows for people with negative equity to refinance at a record low rates which certainly could add so weak -- released. that is really concentrated in a select number of states. nevada, for example, where roughly three-quarters of all homes are experiencing negative equity. other states do not have the same scenario. the recovery, as it were, in the housing market, is uneven across the country. as we think about solutions to the problems, it is really coming up with the selected solutions in key markets and areas that will help the most. host: overall, i would imagine you would like to recover because it means more mortgages. what is your official policy on ways that it can and should be addressed?

guest: i spent a couple of years in the administration. i was federal housing commissioner for the obama administration and i have been in the industry for about 30 years. our policy is that there is no single solution that will deal with this crisis we are going through. people who lost their jobs to find themselves unemployed. there are forbearance programs that can defer payments for a period of time. people have no equity, there is the harp program that allows you to refinance at a higher loan to value and it needed cash flow back to your family. restructuring, short sales, other efforts permitted under the making home affordable program by the administration. so, it is not one single federal solution. we support, i support, and it is very important consumers have access to any program that can help them. this is a very personal situation, when you find

yourself not able to make your mortgage payment. and the solution that best meets the needs of an individual will vary on the personal situation. host: let me tell you about his background. first of all, from colorado -- bachelor of arts from the university of colorado in boulder. started out as a mortgage banker and an progressed at -- to senior vp at freddie mac, senior vp of wells fargo, president and ceo of long and foster, the nation's largest private real- estate firm. an assistant secretary of housing and federal housing commissioner act hud, housing and urban development, during the obama administration. we are going to play a clip from president obama about mortgages and housing in the state of the union tuesday night. >> while government can't fix the problem on its own,

responsible homeowners should not have to sit and wait for the housing market to hit bottom to get some relief. that is why i am sending this congress a plan that gives every responsible homeowner a chance to save about $3,000 a year on their mortgage refinancing at historically low rates. no more red tape, no more runaround from the banks, a small fee on the largest financial destitution will insure it will not add to the deficit and it will give banks rescued by taxpayers a chance to repay the deficit of crust. -- let's never forget, americans who work hard and play by the rules every day deserve a government and financial system that does the same. host: reaction to the president's proposal. small good -- sounds good, a small feed taking care of the deficit and refinancing may be easy without red tape. guest: i think it has been a tremendous asset to have the

administration at least working to implement as many plans as possible helping consumers in need. interest rates, as we know, are at historic lows and the ability to refinance at these nearly 4% rates can put a lot of needed cash flow into family's hands as well as stimulate the economy. host: how would it work? guest: we have not seen his plan. there is a lot of speculation about how it could work but my sense is it would require legislation. perhaps the fha would be involved. but it would have to be, in a way, and essence to give consumers the ability to refinance, if they are not harp eligible. and there are also existing refinance programs available for any borrower who could qualify. fha allows refinancing up to 97.75% of the property's value

within the loan limits standards. i think this will probably be for non-harp eligible borrowers who cannot in in the program because they have a long financed by freddie mac or fannie mae or faa which already streamlines. the question is who will provide the financing for it. if it is a government agency, it is likely to be the f h a. we look forward to seeing the program the president and the administration may present and we will support any reasonable effort to help consumers take advantage of the financing options available. host: a note more on harp, but does it stand for? guest: hoh affordable refinance program. host: reporting i have done on it, the readings suggest that people are not accessing its at the levels anticipated. why is that?

guest: a national -- natural resistance. talking about the trust deficit -- who do i call? how are they offered? in many cases, the borrower must call their servicer, and the servicer may be the only institution that can offer the program. but there are two ways you can access and find more information. one is to call your servicer directly and the other is to call the hot line set up by the administration to help consumers in need and they can direct them to how to find out more about the harp refinance program. but it is restricted to fannie mae and freddie mac. the first question is, when you buy your home, get your mortgage, most of your viewers the not necessarily know who owns your loan. it could be private investors, the fha, freddie mac or fannie mae -- host: or bundled into derivative packages.

guest: private label securities. but if it is freddie mac or fannie mae -- it is certainly available and i suggest any viewer or anybody wondering if they can qualify, make the call and find out if you are eligible. host: in a general sense, when host: in a general sense, if they were to refinance at lower rates, what happens to the extra money that they all? does somebody week that in the process, or does -- do they still allow the same amount? >> under the harp program, you get much lower rates. it varies depending on the need. the negative equity challenge for this country, if you are at 105% negative equity, that could be made up while taking advantage of low interest rates.

it is more severe, 120%, which is less frequent, but definitely exists in certain markets, there needs to be other solutions potentially offered. the administration has to refinance program that provides for the opportunity for any homeowner to get a loan with a principal right down. there just needs to be more potential things offered. host: one more issue from the state of the union -- the president talking about people involved in criminal activity related to mortgages. [video clip] >> i am asking my attorney general to expand our investigations into the lending and risky mortgages that led to the housing crisis, " dick -- holding accountable those who

broke the law, speeding assistance to homeowners. host: david stevens, what is the industry reacted to that you knew you did? -- reaction to that new unit? guest: the vast majority of them are out of business. there are investigations that have gone on. some would argue not enough has been done, but anyone who has violated the law should be held accountable. the president of her -- up with a state attorneys general, -- appointed a state attorneys general, that should be done, did we advocate getting it done as quickly as possible. america needs certainty going forward. as long as there is turmoil and unrest, it means fame is that what to buy homes and want

access to credit, this will impact their ability to move forward. we support going after adding one that has committed wrongdoing. host: let's begin with dawdled, a democrat in texas. good morning. -- donald, eight democrat in texas. caller: i am under water in my home. i have been here for five full years, and not earned one drop of equity. i went through some of the programs you spoke of and found no relief. are the biggest holding might de -- mortgage -- when are they going to put true inventory out there? thank you. guest: first of all, i really appreciate that question because

there are so many people like you better city in negative equity at -- that are sitting here that negative equity. the challenges the bank that originated that mortgage might not even all the bad loan. that -- that load. we have a complicated international services market, where many people are involved, said.here those mortgages i would suggest calling the hope hot line -- 1-88-955-hope. there might be solutions available to you, and i wish the best to you. host: i am sure you understand the frustration. we're getting thomas to that effect. this from twitter from mike

freeman -- gee, i understand that frustration. -- guest: hi understand that frustration. i have hundreds of calls coming in when i was in the administration. i think the fault is in many places. banks are clearly one of those. most of those banks and not in business. the problems do not go away. we have roughly two thousand, two hundred financial institutions in our membership, most of which are small community banks or credit unions, a handful of large institutions that dominate the market. lack of regulation, how investors doppler old -- boy got over it super 48 project --

doubt over exuberant for a project, but this can never happen again. it has destroyed the wealth of too many americans. it is something we have to work and to make sure there is a stable system going forward. host: mary -- guest: absolutely. the glut of foreclosed inventory is terrible. the most difficult aspect is if you live on one of those streets where of their homes are vacant, and there is crime that happens in certain cases, or the homes it gutted or are not maintained, more often than not it is due to abandonment. once the home is foreclosed upon, it is the obligation of the servicer or the investor to maintain the property, but it

between the foreclosure timeline when people have vacated the home, that will drive down the value of all the other family homes in the community. we need to address this inventory and get through this foreclosure process, trying to protect every family we can't let them stay in their homes. there are many solution -- and let them stay in their homes. there are many solutions. host: jim, south carolina, a republican. caller: for the last three years obama as implemented a lot of these policies, and is irksome that these new policies are not any different. you want to believe him because he is charismatic i hope that a lot of these policies really have not worked. before he came to congress in

the 1990's, he was an activist, and in many cases demanding home loans for people that could not afford or, put the money down. he is part of the problem. when did anyone hold a god to anyone's head to buy this realistic? it is irksome to hear how great realist it does, and then when goes down, everyone walks away. where is the personal responsibility? everyone is a victim and the banks are the sole prior of this mess one mortgage brokers were sweet-talking people into this? for the people that did not know any better, there is an element of that, but there is an element of people thinking realist it would always go off, and then you have this bubble, and you have this housing leverage. that is the big problem.

what a person walks into a big concerns here is 400 grand for a cd, and the next person says i want a mortgage for 400 grant, that is not the bank's money. your caller seems to think let's give this homeowner a break. there is no one that made that homeowner over-extend themselves. for people that walked into something that they did not know about, that is different, but it is not everybody who is just a victim as a homeowner. would you not say so? guest: you point out, and this is something that is the real challenge -- it often becomes the reason why some of these programs are hard to implement. what the caller is highlighting is the moral hazard issue of who do you date out?

who do you provide the programs to? for those that speculated in the market, or did not disclose income sources, perhaps that is their problem in terms of responsibility, but there are other people in a recession that are impacted. if you have a job loss because you work for an auto combat manufacturers in the midwest, -- auto manufacturing in the midwest, and you lost your job, and in a recession like this, other solutions you provide to those families? that has been the challenge of many of these programs -- parsing the difference between the moral hazard concerns of not providing free money to those who made bad decisions, as opposed to those who have been infected through no fault of their own. that has made these programs much more difficult. under the making home affordable

program, hamp, it is modified under 1 million families. in total, there have been 5 million modifications done since the beginning of this recession. it has been helpful, but it is not enough that is an important part of the debate. host: we posted a conversation with you on our facebook page, and the question is what is your prescription for the troubled housing market. here's one from william meredith who writes -- jobs, time, and population inflow --

guest: excellent point. i do not have anything to add other then it points to the many solutions that are needed based on the needs of the community and the individual. the issues are not evenly applied across the country. unemployment and-equity is more harsh in certain states. other markets are more on their way to stabilization and recovery, and that points to those issues. host: here's another one -- guest: these kind of views are exactly what is great about this debate. it points out the positions. if you lost your job, you can bet for the payment in your

home, the feeling of desperation and help needed is something where you will have a different view. it is very personal. on a broad scale, the government's role in housing is way too big. 90% of mortgages are financed by freddie mac or fannie mae. you have the government playing an extraordinary role in housing, not to mention the modification programs and refinance programs, and the federal reserve's role in buying mortgage-backed securities. this is unprecedented, but we are in and unprecedented recession, something that has not happened since the great depression, and we have to be thoughtful to get through this recession, and not provide a bailout for everyone.

if you have a home in foreclosure in your neighborhood, that home will sell at a discount, and drive down home values for neighbors around you. the first line of defense is trying to keep a family in their homes. the second step is if they cannot stay, transition that as quickly as possible to sell. host: marion. good morning. caller: good morning. thank you for c-span. i called a while back when you had people on about three or four months ago talking about the harp program. i began working on a harp in august. they just declined meet this month. so, for six months i have waited for help. i think it is important for

people to understand that not everybody did things wrong. i came from a poor family. i in the single mother with five children. i work every day. i saved and came up with a down payment. i was taught that when you went to the bank the man at the bank knew what was right and what was fair, and he would help you. i did that stuff, and put $15,000 on my home. in the first month they stole my loan. the first company that took it raised the payment $50 within the first year with no explanation. i do not know what they're tree believe people are supposed to do. -- believe people are supposed to do. the biggest problem with the harp program, and i learned this from you, suzanne, all of all mortgages are insured by these banks, and it is not in their

interest to cut interest rates or shave my mortgage. it is in their interest for me to declines of their insurance will pay them for their loss. here, id eleanor, and outside of chicago, -- in illinois, i am outside of chicago, we just had 110 houses torn down, foreclosed by the banks, and they gave this land back to our city. so, it is again on our books with no people and nobody paid property tax. i think people should remember clearly george bush during his presidential debates promised to put 1 million new homeowners in homes, and he did. all of these things were fixed so that we would have a housing bubble, so people would make

enormous profits, taking a vintage of poor people. -- advantage of poor people. host: lots of topics to follow up on. guest: first of all, that is the story that there needs to be focused on -- the single parent with children bought a home, put her down payment down, and finds herself in a situation where she cannot afford her home. the question i really would like to know was the purpose of that definition, and i will reemphasize calling the hope hot line if she has not done so already. there are a lot of issues here that are being brought up. without question, one of the points i would assizes this pursuit of how will the ship was far too extensive --

homeownership was far too expensive. homeownership that all costs was a way to get rich quick. there was speculation involved. product offered with no down payments, no documentation in the markets and institutions no longer exist, exacerbated the bubble and it was policy makers as well that participated. host: from the policy-making aspect, it was cited debt holders have a greater investment and stake in the community, so let's encourage home ownership. this caller believes it was -- let's make everybody rich. guest: there has to be a balanced housing policy. secretary donna the end of -- donovan of hud has said there we

need an extensive balance. there are people not prepared for ownership. sub-prime mortgages are a credit simple. there were typically fixed for two years and the theory was that the bar were compelled credit would improve and -- the bar were's credit would improve -- borrower, the credit would improve. there are studies that show that for the right committees 0 motorships in -- home ownership can create better communities and stability. if you are qualified did have a good job, home and -- homeownership makes sense. for people where it is short- term, or wait to make interest

-- instant money, that's an area has to be stopped. right now, we have moved credit to the other side, where access to credit is more conservative than i have seen in well over a decade, and we need to find a right balance. >> c-span junkie -- host: c-span junkie from twitter -- guest: i am not sure what he means by consented to the housing industry. there is a glut of homes in certain markets. judicial states are a perfect example, whether foreclosure time and process takes a long time. the challenges, if a home is going to be foreclosed on, and it is abandoned, the servicer cannot access the home because

they do not own it until it goes to foreclosure. it is a challenge for this process. we see high abandonment rates, and that impacts the homes in the committee. there are maintenance concerns. this individual must be in one of those communities for this post. host: we're talking to david stevens, the head of the mortgage bankers association, and it comes to that job from beijing positions and public policy positions. -- banking positions in public policy positions. and i wanted to s to about your job at freddie mac. from your inside view, what should be done about freddie mac? guest: well, freddie mac and fannie mae have cost taxpayers $175 billion so far. it was not their primary business for -- that was the reason for their default.

their standard line of business is essentially still performing well. to the elected default rates are still around the -- cumulative default rates are still around 5%. the challenge is risking -- investing in risky assets, which ultimately brought them these institutions. the challenge for the taxpayer and for everyone is the government guaranteed the institution itself, which means we are paid for the bad behavior of their investment activities. how do we get a system that goes forward? i think we need to have a guarantee, at least some level, of mortgage-backed securities just to ensure continued availability of mortgage credit.

it should never be a mortgage- backed institution, because that is how we pay the price. host: the next call comes from raleigh, north carolina. greg is a republican. caller: thank you for taking my call. thank you for this guest. i think the cry from our federal government for decades was that everyone is entitled to a house without exception. decisione government's to put people in houses, whether or not they could pay for them, whether or not they could qualify for them, whether or not they could keep them, and when the chickens come home to

roost, it was like a house of cards. it fell down. this fannie mae and freddie mac situation, where we are about $700 billion already, this is a mess. i'm not a ron paul fin, but he said last night we live in a free enterprise system, and if we let the free enterprise system work, this would not be a problem right now. it would continue to be a problem. guest: it is an interesting point. without question, the role of government has been too big, and the over the exuberance promoted by all parties threat the last several decades was clearly to strong. i would say the housing bubble

from the worst years of 2006, 2007, in 2008, which were the peak years, much of the products were from the private market. fannie and freddie invested in those to some degree, but they were really not alone. these took down companies like lehman brothers, and they were sub-prime mortgages, and these programs were financed by the private markets. i go back to many decades and every member of the savings and loan crisis of a few decades ago, -- i remember the savings and loan crisis of a few decades ago when private institutions invested aggressively in the mortgage market and that impact of the savings and loan market.

i am a huge proponent of balance. extremes on any side can ultimately cause significant disruptions. this is the most severe any of us have experienced, but without question, going back to a fully privatized market does not remove the ills. host: wanted the dodd-frank reform due to address the concerns -- what did the dodd- frank reform due to address the concerns? guest: several things. it created the consumer financial protection bureau, and richard cordray is now their director. more specifically, there are two rules -- one is called qm , the qualified mortgage, and then the qrm. the qualified mortgage standards

require that loans must be fully documented with a proven ability to repay. standards have never existed before. under the qm rule, these loans that destroyed so many americans, because they did not understand what they were getting into, or made bad decisions themselves, those will not exist anymore under the qm guidelines and the qrm guidelines. we have concerns of some of this might go too far and the limited access to ownership because of these roles. that is why we need balance -- safe, sound, sustainable, fully transparent mortgage programs and disclosures have to be the

role of the land going forward, and we also have to make sure we do not eliminate excess simply because they do not have 20% down payment. host: free lancer tweets -- guest: they were not made for people with great credit, which is why they were rated sub prime. the point is clear. there is to much salesman ship, as it were, in the markets, with programs in needed far greater explanation. -- that needed far greater explanation. most of those programs are prohibited in dodd-frank. host: also, people cashing in on their mortgages, and

people are finding they were building the debt responsibilities -- has a practice banned regulated? guest: it has been curtailed because the institutions that events that credit are not available anymore today. from a regulatory standpoint, they will be controlled through this qualified mortgage standard requirement. yes, indeed exchanged -- in the extreme, you could buy a home that would appreciate to%, or 3% a month, and that money gets spent, but your mortgage payment stays there for 30 years. those practices have to be curtailed. you can not use real estate as a td bank. real-estate is shelter. -- as a piggy bank.

real estate is a shelter. that speculative nature has n expensive black eye. host: nancy sherman has a different proposal altogether . guest: that is out of my area. i have seen, in effect, even in the occupied movement, one of the desires. stephen debt is a serious problem. debt in general is a serious problem. it is a big challenge this

nation faces s and economy. it is expressed in that? -- has and the economy. it is expressed in that question. this is a nation as been a nation of borrowers and spenders for far too long, and we need to get to a protocol where we are savers and investors. that is a transition as think we will learn. host: robert, an independent in nashville. caller: i wanted to address this to c-span, and not necessarily david stevens, who essentially it is a shill for the mortgage banking industry, ok? the entire crux of this is the biggest crock i have ever heard

in my entire life. my wife and i played by the rules, paid our mortgage on time, did everything we could possibly do to keep our home without any problems. we paid on time every time. we realize the mortgage was under water, and we refinanced in 2006. we are not broken. we have one home. we do not have a home in florida. we have a home in tennessee. this mortgage bankers' association guys sitting there is nothing but a shill for barack obama. we voted for barack obama. he did not do a thing for us. dodd-frank did not do a thing for us. they said tests of thing about forbearance, and they said -- sent us off thing about forbearance, and said if you

pay $6,000, will extend your payment out. if we had 6000 extra dollars, we would not have been in this position to begin with. this guy is nothing but a liar. host: robert, we will leave it at that point. guest: it expresses the anger. it is a challenge. when i left the administration i was deciding whether to stay in washington or go back to private industry. this outcry is not uncommon. the reality is we need certainty and we need to get markets that are functioning going forward so families can have access to credit, something chairman bernanke talked about in his white paper a few weeks back. this a bear is a reflection of the overall concern of those seven -- a deere is a reflection of the overall concerns.

host: the fed plans to keep the same is a strict policy through 2014. -- the same interest rate policy through 2014. i'm wondering what that might do for people looking for holders of in the next five years? looking -- looking for homes in the next five years? guest: this is not a push for one way or the other, but low interest rates and the cost of real estate in this country, in my 30 years in this housing system, i've never seen both at such an opportune time for families that are qualified and can afford to buy a home. i think the fed chairman directing a long term message about interest rates sends column and certainty to markets about what they can expect.

will it be that long? it depends on the trajectory of this economy, but as long as the economy remains soft, the ability to keep rates low provides capital flowing to the markets and families, and that helps the recovery. host: thank you for being here. our next segment, thomas edsall, talking about his new book, which deals with federal budget, the deficit, and the u.s. economy, and what he calls the politics of austerity. we will be back. ♪ [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> i do believe the west for all

of its historical shortcomings, and i am speaking in my book for discussing these shortcomings because they have to be admitted, but for all of them the west still represents the most acceptable and universally workable political culture >> in 1991, the united states was the only global superpower. today, how to restore its status from zbigniew brzezinski, on his strategic vision and saturday night at 10:00 p.m. eastern. also, did fdr use world war ii as a cover to create a more powerful executive branch? sunday night at 10:00, the new privacy is no privacy. lori andrews, and how your rights are eroded by social networks.

booktv, every weekend on c-span to. >> c-span's road to the white house coverage takes your live meeting up to tuesday's gop primary. >> by the end of my second term. [applause] >> we will have the first permanent base on the moon and it will be american. [applause] >> evan bayh the end of 2020, -- and by the end of 2020, we will have the first continuant propulsion system in space capable of getting to mars in the short time, because i'm sick of being told we have to be timid and limited to technologies that are 50 years old. >> and when the founders said the creator had endowed us with certain unalienable rights, they made out right path for america that was not temporary, a path

that says in america we can pursue happiness as we choose. we do not need a government to tell us what kind of car to get, what kind of light bulb we can have, what kind of health care we're going to have. >> see what the candidates are posting on social media along with political reporters and viewers like you and see standoff -- on c-span.org. >> "washington journal" continues. host: we walked back -- we welcome back mr. thomas edsall, who is now teaching journalism at columbia in new york city, and the as a new book out called "the age of austerity -- how scarcity will remake american politics." i pulled a headline from your old paper, i did tell the washington post -- "the

washington post." how do you define austerity? guest: austerity grows out of the beliefs of the federal government no longer has the resources it once had, and debt becomes threatening in the sense that if it gets higher and higher, which is -- it is on a path to do, our ability to borrow money, which is essential for governance, will either be impossible to borrow, or the rate charged will be prohibitive. it is a strong drive, pushed hard by the republicans to cut back, and you see this in the defense department, and you saw it in the congressional debates over the budget and the debt ceiling.

who is going to take the cuts becomes the big fight. it is no longer a situation when you have a pie, and you can cut taxes and increase spending. somebody has to be hurt in the process and the defense department is one of those preparing for that. host: in 1992, ross perot was telling the americans about the concern of the national debt. what is different about that time? guest: the debt back then as a percentage of the gross national product was not that threatening. it is reaching a point now where we are going to hit an historic high in 2025, higher than in world war two, as a percentage of what the whole economy produces every year. debt will be larger than the whole economy at that point, and

by 2033, they talk about it going up to 190% of gdp. these are geometrically different numbers. the cost of medical clair -- care has been elevating debts such a high rate that it is not contained it will be almost impossible to continue financing the medicare and medicaid budgets. so, this pressure to squeeze in cutbacks will be present for quite a long time. host: you cite polls. you say that we signed as a people mixed messages to politicians. guest: no one really wants to cut social security or medicare, including the tea party people.

the leaders might want to talk about cutting back entitlement programs, but if you poll members of the tea party, they are supportive of those programs, and tea party members tend to be older people, and many are on social security and medicare, and they see those programs as their programs, and do not want to have that be part of the budget-cutting process. there is a mixed message coming from the public. it has been nickel, dining, on this deficit problem, but not an assault. host: there was a lot of heat about the debt reduction in the summer time, but you talk about how this town often uses accounting gimmicks and other methods to look light they're

tackling a project more than they might be. what really happened this time? guest: there were some cuts in the deficit. the debt ceiling debate resolution, but not anywhere near as much as anyone describes it. in terms of reducing the long- term debt, it is really just nicking at the site. he did not cut the tree down, you chop at the bar, in a sense. no one really wants to chop the tree down. republicans, push comes to shove, it will be interesting if they win both branches of congress and the presidency, will they be able to push the paul ryan budget which does do severe damage to federal government spending, and welfare

programs in general, including medicare. that would be interesting weather they have the nerve and power to enact that. host: you write about is getting tougher as time goes on. what do you see in the political landscape as the so- called politics of austerity become more prevalent? guest: id has changed the way americans have traditionally dealt -- it has changed the way americans have traditionally dealt with political issues. historically, the country has grown, and you can compromise. when you have a stagnant economy, faced with a growing debt, then you have to cut back, and that means for every winner, there has to be a

loser, and it might be worse than that, with just picking losers. the american system is not comfortable doing that, and with the filibuster and other protections of minorities built into the systems, it is hard to inflict those kind of, basically, punishments on one group, and very few people in this circumstance are willing to compromise. host: join us in the discussion of the politics of austerity. thomas edsall is here to take your telephone calls. we will begin with a greenbelt, maryland. timothy is a democrat there, you are on the air. caller: this country has always had debt. what we need to look get is manageable debt. this country lives off of people investing money in to this

country. we produce a lot of things, but a lot of money from around the world finds itself and our banks so they can get interest. so, we are going to have debt. we should try to calculate manageable debt. i do not know what that percentage of our gross national product would be, but i do not think we are in worse shape than other countries. i think we should look at the debt as something we could manage. they we would be better off. thank you. guest: normally speaking, the country does have to borrow money. being in debt is part of the routine of the operation of the system, just like in a household you borrow money to send your kids to college, or pay for your groceries. all of that is part of the

normal system. if the debt gets really huge relativity what your income is, then you start having a problem. just as you have that problem in a household, you have the problem at the level of the federal government, and the problem really becomes the people that lend us money begin to worry we will not be able to pay them back. then, they start demanding money, or higher interest rates, and higher interest rates compounds the problem of the size of the dead because you have to pay more in debt service. this is not an insignificant problem, and it is similar to what happened in the collapse, where people could tell it comes, as they have mortgages with escalate -- people's incomes, as they had mortgages

with escalating rates, and things went belly up and they foreclose. i am not point to say that will happen in the united states, but there is a similar threat, and you cannot dismiss debt as something we have always had an something we will be able to deal with. host: chris, chicago, a republican. caller: my question has to do with how you would define austerity. with the military budget and subsidies to corporations, you have a lot of money that is going to that side of the aisle, while there is a lot of need -- poverty, the infrastructure, and that kind of thing. if you take the military budget, cut it by some amount, and the end we are still

spending more money than 10 countries on military, is that fair, or what level do we have to go to for someone to see it as being austerity? guest: it is a good question that goes to the heart of what the politics of austerity are. when you start to cut back who is going to be cut back, you'll are making the argument -- you are making the argument that the money going to the military and subsidies to go through corporations might be good areas to cut in. there are people on the other side of the fence that will defend the spending in the text -- in the defense department and the tax breaks to the corporations. they have been doing this effectively, and basically you are arguing a 0 some argument in

which your opponents should take the cost of austerity on their backs, and your opponents will make the same case for the programs you want to preserve. you were talking about poverty programs and programs that help the poor. those programs have been targeted heavily in this process. you have, in effect, a war over limited resources. your point is well taken, but it really is you are on one side of a battle, and there is opposition. age of leesburg, -- host: leesburg, virginia. allen. caller: good morning. thank you for taking my call. all of these candidates are talking about saving $400

billion over the next 10 years, and that amounts to $40 billion of year, which is a drop in the bucket. only ron paul has been talking about cutting $1 trillion in the first year, and i do not think we need to spend $1 billion in an embassy in baghdad that is bigger than the vatican. how can that help america? guest: i did not want to defend or criticize certain programs, but if you talk about cutting $1 trillion out of the budget, as ron paul is out of the budget, that is a major surgical operation, and the foreign aid budget is relatively minor,

such -- just as welfare is a relatively minor things. you are getting into areas like national parks, the fbi, the justice department, basic functions of the government that have a lot more support than our probably over-staffed embassies in baghdad, london, etc., etc., etc. it is easy to say $1 trillion, but you have to spell it out. it is a big difference. host: what can you look -- what can we learn from here up? guest: -- europe? guest: their imposing austerity programs, and so far they have not paid off with growth.

the premise has been if you get these countries back into balance, they can then start functioning. that kind of quick austerity looks like it might not work, and might worsen conditions. this country has not really in post that kind of austerity, the time you see in greece and ireland, -- the time you see in greece and ireland. i think a lot of economists agree with this -- at this moment, were you still of the aftermath of the recession, -- where you still have the aftermath of the recession, you do not want to cut off the federal government's spigot, and closed down growth -- slow down growth. host: how pivotal will the 2012

election be? guest: i think it looks at it will be the most ideological election we have had in my lifetime. we have had some ideological ones like jimmy carter against ronald reagan, but jimmy carter was wish-washy. that looks at for the republican nominee is, and it looks like there will be forced by events and the nature of political competition into a real confrontation, and with -- it will be one of the most interesting collections we have had in a long time. host: pensacola, florida. jackie is a democrat. caller: i lived part-time in florida, and part time in ohio, and i know that hospitals that used to be run as nonprofits are

now for-profit hospitals, and they spend big dollars on big atriums, a big lobbies, but no money on the little rooms for people, and the rooms that they do have, they have gone from rooms that were specifically used for taking care of sick people, to looking like hotel rooms. the cost of this is enormous. we have a hospital in ohio that spent $17 million just on the lobby. they talk about health-care costs. is this not kind of the reason why we are in such deep trouble? we have for-profit hospitals and insurance companies, and that means that everything keeps going up and up, and the doctors involved in the hospital are the

doctors that we go to for our health care. well, tell me what we can do about that. thank you. guest: all right, well, reforming health care cost increases is one of the hardest things to do. health-care economics is an arcane system with third-party payments. you are correct but there is a lot of waste in the system. i do not think anyone would disagree with you. how to make the system work -- a lot of politicians do not want the government interfering with the private sector, including the health-care sector. in that case, it then becomes very difficult to restrict the kind of spending you are describing where they are trying to attract, i assume, high- paying customers, who will pay

top dollar for their health care because the place looks more like a marriott hotel than a hospital. you have a good point, but it touches the surface about frankly a huge mess down below that is very complex. i hate to think how complex it is. host: jim on twitter -- react to his comment. he writes -- guest: there is a big argument -- i am not sure that i share this view -- but an argument that argues the country is doing much too much for the old generation, and too little for the young generation, and this

becomes an acute problem when you have austerity coming in -- who will take the cuts? the social security program has been indexed through inflation, and medicare has grown in cost way beyond the rate of inflation. the result has been a transfer of income and wealth to people over the age of 65, while a the same time we are cutting back medical and other programs for children. so, there has been expansion there, but nothing like the growth in the older categories. host: you write that the interesting thing now is that this changing demographic -- younger people, more of color, are basically through their wages supporting and older, white population. how do you see that effecting pocket -- politics?

guest: it will be a bitter fight. if you looked at the demographics of every age group, old people are overwhelmingly white, and younger generations are increasingly black and hispanic. what that means is the people working and paying the costs of social security and medicare for basically a white, older population, are going to be a black and hispanic minority population. where this gets to be really acute is that the paul ryan budgets proposes that everyone 55 years and older is protected. they would keep all of their benefits, these older, more white people, but at the point where the 55-year-olds become 65, people would